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Supply continues to rise, yet 23% is currently under offer
Panattoni Park Avonmouth, where Panattoni, advised by Savills, is delivering 1.3m sq ft speculatively
The wider region has seen a significant uptick in supply as speculative developments have reached practical completion and second-hand units are returned. With inflation levels waning and base rates peaking, we have seen a recent return of occupier demand. In Wales, there has been significant interest from data centres seeking to benefit from the UK fibre-optic cable network and cheaper land values. We expect this to remove significant levels of space imminently
Rob Cleeves, Director, Bristol
Supply
Currently, there is a total supply of 7.72m sq ft across 26 units, an increase of 65% in the last 12 months. Of this, 3.25m sq ft is located in the South West and 4.47m sq ft is located in Wales. The largest unit available is the former Ford Factory in Bridgend, Wales, which spans 1.6 million sq ft.
In terms of quality, 35% of available space is classified as Grade A, 8% as Grade B, and the majority, 57%, as Grade C space. A large proportion of the vacant stock does not adhere to modern occupier requirements and could be considered obsolete. Currently, just 13% of the total stock in Wales is rated EPC B or above and 33% in the South West.
Furthermore, 62% of the properties available fall within the 100,000–200,000 sq ft size band, while 12% are within the 200,000–300,000 sq ft size band, 11% are within the 300,000–400,000 sq ft size band, 4% are within the 400,000–500,000 sq ft size band, and 11% over 500,000 sq ft. It should be noted the largest three units amount to 44% of the total available sq ft.
Savills new rental growth forecasting model suggests in our baseline scenario, the South West will see 3.8% rental growth per annum over the next five years, whilst Wales will see 2.8%.
Take-up
Take-up in the South West and Wales has reached 3.05m sq ft across 18 transactions, which is 17% above the long-term annual average. The average transaction size has decreased to c.168,000 sq ft in 2023, down from 220,000 sq ft ten years ago. In 2023, Wales has seen 85% of activity and 15% in the South West. In terms of specification, 76% of take-up has been from second-hand space, 18% has been BTS space, and 6% has been pre-let speculatively developed space. In terms of grade, 5% has been Grade A speculatively developed space, 32% has been Grade A, 26% has been Grade B space, and 37% Grade C space.
Analysing take-up by deal count shows 13 transactions within the 100,000–200,000 sq ft size band, four within the 200,000–300,000 sq ft size band and a single transaction within the 300,000–400,000 sq ft size band. In terms of sector activity, manufacturers were the most active, accounting for 47% of all space transacted, the ‘other’ sector followed closely behind at 23%, the automotive sector 14%, and online retailers at 12%.
Development pipeline
There is 1.61m sq ft under construction through five units across the region. There are three units under construction within the 100,000–200,000 sq ft size band, one unit within the 400,000–500,000 sq ft size band, and one over 500,000 sq ft.